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DECREE No. 144/2003/ND-CP OF NOVEMBER 28, 2003 ON SECURITIES AND SECURITIES MARKET

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of December 25, 2001;

In order to create a favorable environment for the securities issuance and trading, encourage the mobilization of long-term capital resources at home and abroad, ensure the organized, safe, transparent, fair and efficient operation of the securities market and protect the legitimate rights and benefits of investors;

At the proposal of the Chairman of the State Securities Commission,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree stipulates the issuance of securities to the public, the securities listing, trading and transactions, and securities and securities market-related activities and services in the territory of the Socialist Republic of Vietnam.

The issuance of government bonds, local administration bonds, securities of credit institutions, shares of equitized State enterprises and shares of foreign-invested enterprises when being transformed to operate as joint stock companies shall not fall within this Decree's scope of regulation.

Article 2.- The principles of operations of securities market

Operations of issuance of securities to the public, securities listing, transaction, trading and services as well as other related activities must ensure the principles of publicity, fairness and transparency, and protection of the legitimate rights and interests of investors.

Article 3.- Interpretation of terms

1. Securities mean certificates or book entries, which certify the legitimate rights and interests of securities owners over assets or capital of the issuing organizations, including:

a/ Shares;

b/ Bonds;

c/ Securities investment fund certificates;

d/ Other types of securities prescribed by law.

2. Warrant means a type of securities issued together with preferred bonds or stocks, which entitles the holders of such securities to purchase a specified amount of common stocks at pre-fixed prices in a specified period.

3. Right to buy shares means a type of securities which acknowledges the right reserved for current shareholders of a joint-stock company to preemptively purchase an amount of shares in the issuance of new common stocks in proportion to their current portions of shares in the company.

4. Treasury stock means a type of stock which has already been issued and subsequently repurchased by the issuing organization on the securities market.

5. Bonus stock means a type of stock which is issued with the retained profit source or other lawful own capital sources of a joint-stock company for free-of-charge allocation to current shareholders in proportion to their current portions of shares in the company.

6. An issuing organization means an organization which has registered to issue securities to the public according to the provisions of this Decree.

7. Issuance of securities to the public means the offering of a batch of transferable securities through an intermediary organization to at least 50 investors outside the issuing organization.

8. A prospectus is a statement of an issuing organization on the financial situation, business activities and plan on use of the proceeds from the issuance in order to supply information to the public to help them evaluate and make securities investment decisions.

9. Securities listing means putting eligible securities in registration and transaction at the central trading market.

10. A listing organization means an issuing organization permitted to post up securities at the central trading market according to the provisions of this Decree.

11. Securities brokerage means activities of an intermediary or a representative to buy or sell securities on behalf of his/her clients in order to get commissions.

12. Securities dealing means the securities purchase and sale by a securities company for itself.

13. Securities investment portfolio management means activities of managing clients' capital through the purchase, sale and holding of securities in the interest of such clients.

14. Securities issuance underwriting means the assistance rendered by an underwriting organization to an issuing organization to carry out procedures before offering securities, partially or wholly purchasing securities from the issuing organization in order to resell them, or purchasing the remaining undistributed securities.

15. Financial and securities investment consultancy means the service provided by securities companies or fund management companies to their clients in the domain of securities investment, financial re-structuring, enterprise division, separation, merger or consolidation, and support for enterprises in the securities issuance and listing.

16. Securities distribution means the sale of securities through an agent or an issuance underwriter on the contractual basis.

17. Securities issuance agents mean securities companies, credit institutions and non-bank credit institutions which undertake to sell securities for issuing organizations on the basis of agreements or through main issuance underwriting organizations.

18. Liquidity capital means capital in cash and valuable documents which can be converted into cash within 30 days to meet the debt repayment and risk reserve demands of a securities company in the same duration.

19. A securities investment fund means a fund formed from capital contributed by investors and entrusted to an investment fund management company, with at least 60% of asset value of the fund being invested in securities.

20. A fund manager means a person designated by the fund management company to directly manage a securities investment fund.

21. A securities custody account means an account used for accounting of the deposit, withdrawal, transfer, delivery and receipt of securities.

22. A designated bank for payment means a commercial bank designated by the State Securities Commission to open payment accounts for the Securities Trading Center, the Securities Custody Center, the Stock Exchange, and custody members in service of payment for securities transactions.

23. A trading representative means a person appointed by members of the Securities Trading Center and approved by the Securities Trading Center to act as a representative to perform the trading task at the Center.

24. A bond owner representative means a legal person representing the interest of a bond owner and authorized to hold bonds.

25. A major shareholder is the one that holds 5% or more of the voting shares of an issuing organization.

26. A control acquirer means an organization or individual that intends to hold either on its/his/her own or together with involved persons 25% or more of stock capital of a listing organization.

27. Foreign party means a foreigner or an organization established under foreign laws.

28. Share split or reserve split means the division of one share into many smaller shares or aggregation of many current shares into one share.

29. An accredited auditing organization means an independent auditing organization accredited by the State Securities Commission to audit issuing organizations, listing organizations and securities trading organizations.

30. A valid dossier means a dossier comprising all papers prescribed in this Decree and having correct and complete contents according to the provisions of law.

31. A valid copy means a copy containing certification by a Vietnamese notary public or another competent agency according to the provisions of law.

32. Involved persons mean individuals or organizations that are interrelated in the following cases:

a/ A parent company and its subsidiary companies (if any);

b/ A company and a person or a group of persons who can affect the decision-making or operations of such company through company management agencies;

c/ A company and its managers;

d/ A group of persons who agree to coordinate with one another in order to control the contributed capital, shares or interests of a company or to affect the decision-making of such company;

e/ Fathers, foster fathers, mothers, foster mothers, wives, husbands, children, adopted children, blood siblings of company managers, company members, shareholders holding controlling stakes.

Chapter II

ISSUANCE OF SECURITIES TO THE PUBLIC

Article 4.- Registration for issuance of securities to the public

The issuance of securities to the public must satisfy the conditions prescribed in Articles 6, 7, 8 and 9 of this Decree and must be registered with the State Securities Commission.

Article 5.- Form and par value of securities

1. Securities issued to the public may be in form of certificate or book-entry.

2. Securities to be issued to the public shall be denoted in Vietnam dong.

3. The par value of a stock or a securities investment fund certificate issued for the first time to the public shall be VND 10,000. The minimum par value of a bond issued to the public shall be VND 100,000 and multiples thereof.

Article 6.- Conditions for the first-time issuance of stocks to the public

1. Being a joint stock company with an already contributed charter capital of at least VND 5 billion at the time of registration for stock issuance.

2. Conducting business with profits in the year preceding the year of issuance registration.

3. Having a feasible plan on the use of capital to be acquired from the issuance of stocks.

4. The issuance of stocks to the public to acquire capital for the establishment of a new joint stock company to operate in the field of infrastructure construction or high technology shall not be required to comply with the provisions of Clauses 1 and 2 of this Article.

Article 7.- Conditions for additional issuance of stocks, issuance of right to purchase shares or warrants

1. The additional issuance of stocks to the public in order to increase capital, issuance of right to purchase shares or warrants shall be conducted only when the organizations issuing stocks to the public fully meet the conditions prescribed in Clauses 1, 2 and 3, Article 6 of this Decree. The issuing organizations may register for additional issuance of stocks in many batches if they wish to mobilize capital in many stages for the same project.

2. Organizations issuing stocks to the public which wish to issue additional stocks for paying dividends or bonus stocks must carry out procedures for registration with the State Securities Commission.

Article 8.- Conditions for issuance of bonds to the public

1. Being a joint stock company, limited liability company or State enterprise with the already contributed charter capital of at least VND 10 billion at the time of issuance registration.

2. Conducting business with profits in the year preceding the year of issuance registration;

3. Having a feasible plan on the use and repayment of capital to be acquired from the issuance of bonds

4. Having an issuance underwriting organization.

5. Bond-issuing organization must determine representatives of bond owners.

Article 9.- Conditions for issuance of securities investment fund certificates to the public

1. The first-time issuance of securities investment fund certificates to the public shall be conducted simultaneously with the procedures to apply for a permit to set up a securities investment fund.

2. The issuance of securities investment fund certificates to increase capital of a securities investment fund must be approved by the State Securities Commission.

Article 10.- Dossiers of issuance registration

1. A dossier of registration for the first-time issuance of stocks to the public comprises:

a/ An application for issuance registration;

b/ A valid copy of the business registration certificate of the company;

c/ The company's charter;

d/ A decision of the shareholders' general assembly adopting the issuance of stocks to the public;

e/ A prospectus;

f/ A list of the members of the Managing Board, the Directorate and the Control Board and their resumes;

g/ Audited financial statements of the two consecutive years preceding the year of issuance registration;

h/ Issuance underwriting commitment (if any).

2. A dossier of registration for additional issuance of stocks to the public comprises:

a/ A dossier of registration for additional issuance of stocks to the public to increase capital, including the issuance of right to purchase shares or warrants, must comprise the documents prescribed at Points a, d, e, f, g and h, Clause 1 of this Article and the documents prescribed at Points b and c if contents of the dossier on the first-time issuance to the public are changed or supplemented after it is submitted.

b/ A dossier of registration for additional issuance of stocks for many batches must, apart from the documents prescribed at Point a, Clause 2 of this Article, contain the issuance timetable for each batch in the general issuance plan, clearly indicating the expected volume and time of each issuance.

3. A dossier of registration for issuance of bonds to the public comprises:

a/ The documents prescribed at Points a, b, c, e, f, g and h, Clause 1 of this Article;

b/ The decision of the Managing Board adopting the issuance of bonds to the public;

c/ The issuing organization's commitment to fulfill its obligations toward investors;

d/ Contract(s) between the bond-issuing organization and representative(s) of bond owner(s);

e/ A written record on the evaluation of security assets' value or a written payment underwriting approval of the underwriting organization in case of issuance of secured bonds.

4. Organizations registering for issuance must take responsibility for the validity of their dossiers. In cases where dossiers already submitted to the State Securities Commission contain errors or newly arising events affect the contents of such dossiers, the issuance-registering organizations shall have to report such to the State Securities Commission and make timely amendments and/or supplements to their dossiers.

5. Issuance consultancy organizations, issuance underwriting organizations, independent auditing organizations and signees of audit reports certifying the financial statements of issuing organizations shall have to take joint responsibility for the validity of dossiers.

Article 11.- Conditions for underwriting the issuance of securities to the public

1. Organizations underwriting the issuance of securities to the public must have issuance underwriting licenses and must not be persons related to the issuing organizations.

2. An issuance underwriting organization shall only be allowed to underwrite the issuance of securities with the total value not exceeding 30% of its own capital.

Article 12.- Issuance registration

Within 30 working days after the organizations applying for issuance registration submit the complete and valid dossiers, the State Securities Commission shall grant securities issuance registration certificates. If the issuing organizations or the State Securities Commission detect errors in the dossiers, the issuing organizations must amend and/or supplement such dossiers to make them complete and valid; then the time of dossier receipt shall be counted from the date the State Securities Commission receives the written amendments and/or supplements. In cases where errors or untruthful information are detected in the dossiers, the State Securities Commission may refuse to grant securities issuance registration certificates.

Article 13.- Information before issuance

While the State Securities Commission is examining the dossiers of registration for issuance, the issuance-registering organizations, the issuance-underwriting organizations and the concerned parties shall only be allowed to honestly and accurately use the information in the prospectuses already sent to the State Securities Commission to probe the market, which must state that the information on date of issuance and securities selling prices is only envisaged information. The market survey must not be conducted on the mass media.

Article 14.- Issuance disclosure

Within 5 working days after the State Securities Commission grants the securities issuance registration certificate, an issuing organization shall have to disclose the issuance on a centrally-run newspaper or a newspaper of the locality where the issuing organization's head office is based.

Article 15.- Securities distribution

1. Issuing organizations, agency organizations and issuance-underwriting organizations must not distribute securities when the issuance is not yet disclosed and the prospectus is not yet supplied.

2. Issuing organizations, agency organizations and issuance-underwriting organizations must distribute securities in a fair manner and ensure a minimum time limit of 15 working days for investors to register for securities purchase.

In cases where the volume of securities registered for purchase exceeds the volume of securities permitted for issuance, the issuing organizations or the issuance-underwriting organizations shall have to sell the whole volume of securities they underwrite to investors in proportion to the ratio registered for purchase.

Article 16.- Distribution time limit

1. Issuing organizations must complete a drive of securities distribution within a maximum time limit of 90 days.

2. In cases where the distribution of securities to the public cannot be completed within the time limit prescribed in Clause 1 of this Article, the State Securities Commission shall consider and decide to prolong the distribution if the issuing organizations so request in writing. Past that time limit, all remaining securities (unsold securities) shall no longer be issued to the public.

Article 17.- Withdrawal of securities issuance registration certificates

1. Securities issuance registration certificates shall be withdrawn in the following cases:

a/ The State Securities Commission detects errors in the prospectuses which may cause damage to investors but the issuing organizations fail to make amendments and/or supplements thereto at the request of the State Securities Commission;

b/ The result of an issuance drive fails to attain a minimum number of 50 investors or the volume of actually issued securities does not reach 80% of the securities volume permitted to be issued.

2. After the State Securities Commission issues decisions to withdraw securities issuance registration certificates, the issuing organizations must promptly notify the investors thereof and withdraw the already issued securities if the investors so request; and at the same time, must reimburse money to the investors within 30 days after the securities issuance registration certificates are withdrawn. Past that time limit, the issuing organizations shall have to make compensations for damage caused to investors according to the terms already committed with the investors in compliance with the provisions of law.

Article 18.- The reporting regime

1. Within 10 working days after the end of an issuance drive, the issuing organizations shall have to report to the State Securities Commission on the result of the issuance drive and publicly disclose such result.

2. The issuing organizations shall have to biannually and annually report to the State Securities Commission on the financial situation and business operations of enterprises. Annual financial statements must be certified by accredited auditing organizations.

In cases where an issuing organization owns 50% or more of stock capital or contributed capital of another organization or 50% or more of stock capital of an issuing organization is held by another organization, it must send together with its financial statement the financial statement of such organization or a consolidated financial statement.

3. The issuing organizations shall have to report on the situation of their production and business activities at the request of the State Securities Commission in case of necessity to protect investors.

Chapter III

LISTING OF SECURITIES

Article 19.- Listing principles

1. Organizations which have securities issued to the public and wish to list their securities must be granted licenses by the State Securities Commission.

2. Each type of securities shall be listed at only one Securities Trading Center.

3. The specific listing at the Securities Trading Centers shall be proposed by the State Securities Commission to the competent State agencies for decision.

Article 20.- Conditions for listing stocks

1. Being a joint stock company with the contributed charter capital of VND 5 billion or more at the time of application for the listing; having a healthy financial status and conducted business operations with profits in two consecutive years preceding the year of application for the listing.

2. For equitized State enterprises which apply for immediate listing on the securities market, their business operations in the year preceding the year of application must be profitable.

3. Shareholders being members of the Managing Board, Directorate or Control Board of the company must commit to hold at least 50% of the volume of stocks they own for three years after the listing date.

4. At least 20% of the stock capital of the company is held by at least 50 shareholders outside the issuing organization. For companies with the stock capital of VND 100 billion or more, such percentage shall be at least 15% of the stock capital.

Article 21.- Conditions for listing bonds

1. Being a joint stock company, limited liability company or State enterprise with the contributed charter capital of VND 10 billion or more at the time of listing application for the listing.

2. Having conducted business operations with profits in two consecutive years preceding the year of application for the listing and a healthy financial status.

3. Having at least 50 bond owners.

Article 22.- Listing of Government bonds

The listing of Government bonds shall be conducted by the Securities Trading Centers at the requests of bond-issuing organizations.

Article 23.- Conditions for listing securities investment fund certificates

Within 30 days after the end of a drive of issuance of securities investment fund certificates to the public, the securities investment funds shall have to carry out the procedures for listing registration with the State Securities Commission, if they meet the following conditions:

1. Having the total value of issued securities investment fund certificates (according to the par value) of at least VND 5 billion.

2. Having at least 50 owners of securities investment fund certificates.

Article 24.- Dossiers of application for stock, bond, securities investment fund certificate listing licenses

1. A dossier of application for stock listing license:

a/ An application for stock listing license;

b/ A decision of the shareholders' general assembly or the managing board on the stock listing;

c/ The book for monitoring shareholders of the listing-applying organization;

d/ A valid copy of the business registration certificate;

e/ The charter of the company;

f/ The prospectus;

g/ The list of the Managing Board, Directorate and Control Board members and their resumes;

h/ Commitments of the Managing Board, Directorate and Control Board members to hold at least 50% of the volume of stocks they own for the duration prescribed in Article 20 of this Decree, after the listing date;

i/ Financial statements certified by the accredited auditing organizations .

2. A dossier of application for bond listing license:

a/ An application for bond listing license;

b/ A decision of the shareholders' general assembly or the managing board on the bond listing;

c/ The book for monitoring bond owners of the listing-applying organization;

d/ A valid copy of the business registration certificate;

e/ The charter of the company;

f/ The prospectus;

g/ The list of the Managing Board, Directorate and Control Board members and their resumes;

h/ Financial statements certified by the accredited auditing organizations .

3. A dossier of application for securities investment fund certificate listing license:

a/ An application for securities investment fund certificate listing license;

b/ A valid copy of the business registration certificate of the securities investment fund management company;

c/ The charter of the securities investment fund;

d/ The prospectus;

e/ Result of the issuance of securities investment fund certificates;

f/ Commitments of the fund founders not to transfer securities investment fund certificates they own within 2 years after the listing date.

4. The compilation of dossiers of application for stock or bond listing licenses must be counseled by at least one securities company which shall take responsibility within the scope of consultancy.

Article 25.- Responsibilities of listing applying organizations and concerned organizations

1. Organizations applying for listing licenses must take responsibility for the validity of their dossiers. In cases where they detect that the dossiers already submitted to the State Securities Commission are incomplete or contain inaccurate information or there have arisen new events affecting contents of the already submitted dossiers, the listing license-applying organizations shall have to report such to the State Securities Commission for timely amendments and/or supplements to their dossiers.

2. Listing consultancy organizations, accredited auditing organizations and persons who sign to certify reports on auditing of the financial statements of listing license-applying organizations must take joint responsibility for the validity of dossiers of application for listing licenses according to the provisions of law.

Article 26.- Listing changes

1. Listing organizations which additionally issue stocks in any circumstances shall have to carry out the procedures for registering the additional issuance of stocks according to the provisions of law.

2. Listing organizations which wish to make split or reverse split of stocks shall have to report and re-register the listing with the State Securities Commission on contents related to the stock split or reverse split.

3. Listing organizations which undergo separation or merger without changing the listed legal persons shall have to re-register the listing with the State Securities Commission.

4. The change of the listing places of securities currently listed at the Securities Trading Centers shall comply with the provisions of law.

Article 27.- Approval or refusal to grant listing licenses

Within 45 days after receiving the complete and valid dossiers, the State Securities Commission shall have to grant listing licenses. In case of refusal to grant licenses, the reasons therefor must be clearly stated in writing.

Article 28.- Obligations of listing organizations

1. Listing organizations must carry out the procedures for listing and registering listed securities according to the provisions of this Decree.

2. A listing organization must disclose the listing at least 5 working days before securities are traded on three consecutive issues of a centrally-run newspaper or a newspaper of the locality where the listing organization's head office is based or on the securities market bulletin. Contents to be disclosed include:

a/ The listing license granted by the State Securities Commission;

b/ The date securities are permitted to be traded;

c/ The place where the prospectus is supplied.

3. Listing organizations must observe the reporting regime according to the provisions in Article 18 and the regime of information disclosure in Chapter VI of this Decree.

4. Listing organizations must pay listing charges according to the provisions of law.

Article 29.- Delisting

Listed securities shall be delisted when one of the following cases occurs:

1. Securities no longer satisfy the listing conditions within the prescribed time limit;

2. Listing organizations cease to exist due to merger, amalgamation, division, dissolution or bankruptcy;

3. Listing organizations submit applications for listing cancellation, which are subsequently consented by the State Securities Commission;

4. Other cases prescribed by law.

Article 30.- Relisting

Delisted securities shall be considered for relisting when they satisfy the conditions prescribed in Articles 20, 21 and 23 of this Decree.

Chapter IV

SECURITIES TRADING

Article 31.- Trading modes

1. Listed securities must be traded through the trading system at the Securities Trading Centers or the Stock Exchange by mode of order matching and mode of agreement.

2. Securities trading shall be conducted by mode of order matching on the principle of price priority and time priority.

3. Odd lot transactions in listed securities shall be conducted directly between investors and securities companies being members of the Securities Trading Center or the Stock Exchange on the principle of price agreement.

Article 32.- Securities being placed under control and suspended from trading

1. Securities shall be placed under control when one of the following cases occurs:

a/ For listed stocks and bonds:

- Accredited auditing organizations disapprove or refuse to give opinions on annual financial statements of listing organizations;

- Listing organizations violate regulations on information disclosure;

- Listing organizations fail to strictly observe the prescribed deadline for submitting annual reports;

- Net assets of listing organizations are negative;

- The listing conditions prescribed in Articles 20 and 21 of this Decree are no longer satisfied;

- Enterprise stocks and bonds are not traded within 90 days.

b/ For securities investment fund certificates:

- Fund management companies violate regulations on information disclosure;

- Fund management companies fail to strictly observe the prescribed deadline for submitting annual reports;

- The listing conditions prescribed in Article 23 of this Decree are no longer satisfied;

- Securities investment fund certificates are not traded within 90 days.

Securities are no longer under control when the circumstances mentioned at Points a and b, Clause 1 of this Article are remedied.

2. Securities shall be suspended from trading when one of the following cases occurs:

a/ Securities price or trading volume abnormally fluctuates;

b/ Split or reverse split of stocks;

c/ Serious violations of regulations on information disclosure according to the provisions of law;

d/ Business operations of listing organizations are in the red for two consecutive years;

e/ Case of necessity to protect interests of investors or ensure stable operation of the market.

Article 33.- Price range

Securities trading price range shall be decided by the Chairman of the State Securities Commission.

Article 34.- Internal transactions

Managing Board and Directorate members, chief accountants and controllers of listing companies and involved persons, who intend to trade in stocks of their own companies shall have to notify their intentions to the Securities Trading Centers or the Stock Exchange at least 10 working days before conducting transactions. In cases where they have conducted transactions, they shall have to report such to the Securities Trading Center or the Stock Exchange within three days after such transactions are completed and concurrently notify the listing organizations thereof.

Article 35.- Treasury stock transactions

1. Listing organizations which repurchase their own stocks with lawful capital sources or resell treasury stocks must obtain the consent of the State Securities Commission.

2. Listing organizations must finish the purchase of their own stocks or resale of treasury stocks within 90 days after they obtain the consent. Repurchased stocks shall only be sold when they have been held for at least six months.

Article 36.- Transactions to acquire the control of listing organizations

1. An organization or individual that holds or joins the involved persons in holding as much as 5%, 10%, 15% or 20% of the stock capital of one listing organization shall, upon each transaction which increases or reduces the above-said holding level, have to report in writing to the State Securities Commission, the Securities Trading Center, the Stock Exchange and the listing organization within 3 working days after the transaction reaches the above-said holding level.

2. Control acquirers must report in writing to the State Securities Commission on their controlling intentions. Ten working days after the reporting date, if the State Securities Commission gives no different opinions, the acquirers shall have to publicly disclose their bids on three consecutive issues of one centrally-run newspaper, one local newspaper or the securities market bulletin of the locality where the controlled listing organization is headquartered. After the public disclosure, the control acquirers must not change their already disclosed controlling intentions.

3. Bid prices must not be lower than the current prices of stocks listed on the market before the date of bid.

4. The time limit for public bid is between 30 days and 60 days. Within the time limit for public bid, the control acquirers must apply the conditions for public bid to all shareholders of the controlled listing organizations; must not refuse to purchase stocks of any shareholders of listing organizations according to the already disclosed conditions and must not purchase or sale stocks of listing organizations in any other form. The transactions to acquire the control of listing organizations must be completed within five working days after the time limit for public bid expires. In cases where the control acquirers hold as much as 80% of the stock capital of the controlled listing organizations, such listing organizations shall be delisted. Within 10 days after the disclosure of redemption result, if the remaining shareholders request, the control acquirers are obliged to purchase their stocks strictly under the disclosed conditions for public bid.

5. Control acquirers must not sell stocks they have purchased within six months after the date the control is fully acquired.

Article 37.- Responsibilities of investors

Investors are obliged to open securities trading accounts and to deposit money amounts for purchase or volumes of securities put on sale according to the provisions of law when placing securities purchase or sale orders, and shall take responsibility for their investment decisions.

Chapter V

REGISTRATION, CUSTODY, CLEARING AND PAYMENT

Article 38.- Securities Custody Center

1. The Securities Custody Center shall be established under the Prime Minister’s decision and have the following major functions and tasks:

a/ To provide services of registration and custody of securities issued to the public and provide services of clearing and payment of transactions of listed securities;

b/ To supervise activities of registration, custody, clearing and payment of securities transactions of custody members;

c/ To register security transactions for contracts on securities pledge in centralized custody at the Securities Custody Center;

d/ To supply the list of securities owners to the issuing organizations which have their securities registered and put in custody;

e/ To supply the custody members with information on securities custody accounts of such custody members at the Securities Custody Center;

f/ To fully and promptly supply the banks designated for payment with documents necessary for payment of amounts related to securities transactions;

g/ To notify in time the custody members of the result of clearing and payment of securities transactions related to such custody members;

h/ To manage and use the payment support fund in order to render timely support to custody members in cases where such custody members are insolvent.

2. Members of the Securities Custody Center include Vietnamese commercial banks, branches of foreign banks operating in Vietnam which are granted custody licenses by the State Securities Commission and securities companies having brokerage or dealing operation licenses and already carried out the procedures for member registration at the Securities Custody Center.

Article 39.- Registration of listed securities

The registration of listed securities at the Securities Trading Center and the Securities Custody Center comprises:

1. Registration of information on securities and securities owners.

2. Registration of securities ownership transfer.

Article 40.- Securities custody

1. Listed securities must be put in the centralized custody at the Securities Trading Center and the Securities Custody Center in form of general custody.

2. The securities custody shall be effected at two levels, whereby securities owners must put their securities in custody at the custody members, then the custody members shall put such securities at the Securities Trading Center and the Securities Custody Center.

3. Only custody members shall be allowed to open securities custody accounts at the Securities Trading Center and the Securities Custody Center. For special cases, the State Bank of Vietnam, credit institutions and other organizations shall be allowed to participate in bidding, act as issuance agents or issuance underwriters for government bonds shall be allowed to open government bond custody accounts at the Securities Trading Center and the Securities Custody Center.

4. Securities custody activities cover the following contents:

a/ Opening securities custody accounts;

b/ Managing and safe-keeping securities in a concentrated manner;

c/ Effecting the securities transfers between accounts in the system of securities custody accounts;

d/ Exercising securities-related rights.

Article 41.- Clearing, payment

1. The clearing of securities transactions must be compatible with the volume of securities and money amounts inscribed in transaction vouchers.

2. The payment of securities transactions must comply with the principle that securities delivery must be carried out simultaneously with the money payment.

3. The money payment must be effected through the system of accounts of custody members and of the Securities Trading Center and the Securities Custody Center opened at the bank(s) designated for payment.

4. The payment of securities must be effected through the system of accounts of custody members opened at the Securities Trading Center and the Securities Custody Center.

Article 42.- Conditions for granting custody licenses to Vietnamese commercial banks and foreign bank branches

1. Having licenses for establishment and operation in Vietnam.

2. Having a healthy financial status.

3. Having adequate material and technical bases for the registration, custody, clearing and payment of securities transactions.

4. Having at least two professional staff members and one directorate member who possess professional qualifications in the domain of securities and securities business.

5. Foreign banks with Vietnam-based branches shall be licensed to conduct securities custody activities according to the law provisions of their countries.

Article 43.- Dossiers of application for custody licenses

1. A dossier of application for a custody license of a Vietnamese commercial bank comprises:

a/ An application for custody license;

b/ A valid copy of the establishment and operation license;

c/ Written explanation of the material and technical base in service of the registration, custody, clearing and payment of securities transactions;

d/ Audited financial statements of the latest two years.

2. A dossier of application for a custody license for a foreign bank branch in Vietnam comprises:

a/ Documents prescribed in Clause 1 of this Article;

b/ The foreign bank's letter of authorization for its branch in Vietnam to perform the registration, custody, clearing and payment of securities transactions;

c/ Valid copies of the license or other documents proving that the foreign bank is licensed to perform the registration, custody, clearing and payment of securities transactions according to the law provisions of such bank's country.

Article 44.- Time limit and fee for granting custody licenses

1. Within 30 days after receiving complete and valid dossiers, the State Securities Commission shall grant or refuse to grant custody licenses. In case of refusal, the State Securities Commission must state reasons therefor in writing.

2. Vietnamese commercial banks and foreign banks' branches in Vietnam which are granted custody licenses shall have to pay licensing fees as prescribed by law.

Article 45.- Suspension of operation, withdrawal of custody licenses

1. Custody members shall be suspended from custody operation for no more than 60 days when one of the following cases occurs:

a/ They no longer satisfy the conditions for the grant of custody licenses;

b/ They fail to perform the custody members' obligations prescribed in Article 46 of this Decree.

2. Custody members shall have their custody licenses withdrawn in the following cases:

a/ Upon the expiry of the operation suspension duration, they still fail to remedy the violations prescribed in Clause 1 of this Article;

b/ They fail to commence operations under their custody licenses within 12 months after they are granted licenses;

c/ They voluntarily apply for operation termination;

d/ They terminate operation due to the dissolution, bankruptcy, merger, division, amalgamation or transformation of enterprises.

3. The order and procedures for suspending operation and withdrawing custody licenses shall comply with law provisions.

Article 46.- Rights and obligations of custody members

1. To provide services of securities registration and custody for their clients on the basis of written contracts with clients; to adequately and promptly notify their clients of the results of clearing and payment of securities transactions related to their clients.

2. To perform the registration and custody of securities of their clients at the Securities Trading Center and the Securities Custody Center, and supply the Securities Trading Center and the Securities Custody Center necessary with information and documents necessary for the performance of registration, custody, clearing and payment of securities transactions.

3. To register contracts on pledge of securities in concentrated custody at the Securities Trading Center and the Securities Custody Center.

4. To separately manage each client's securities in custody and manage their clients' securities in custody in separation from their own securities.

5. To contribute to the payment support fund according to law provisions.

6. To render securities supports and receive securities supports from other custody members in case of temporary incapability to pay securities and reimburse according to law provisions.

Article 47.- Rights and obligations of banks designated for payment

1. To pay in full and on time money for securities transactions conducted at the Securities Trading Center.

2. To observe the information, reporting and information confidentiality regime according to law provisions.

3. To have adequate material and technical bases for activities of paying for securities transactions.

4. To request the Securities Trading Center and the Securities Custody Center to supply all necessary vouchers for effecting the payment of money for securities transactions.

Article 48.- Payment support fund

1. The Securities Trading Center or the Securities Custody Center may set up a payment support fund to pay securities transactions on behalf of insolvent custody members. The payment support fund must be managed in separation from assets of the Securities Trading Center or the Securities Custody Center.

2. The level of contributions to the payment support fund and the payment support modes shall comply with law provisions.

Article 49.- Reporting regime

The Securities Trading Center, the Securities Custody Center, custody members and banks designated for payment must observe the regime of periodical and irregular reports according to law provisions on situation of registration, custody, clearing and payment operations. In case of necessity, the Securities Trading Center, the Securities Custody Center, custody members and banks designated for payment shall have to report at requests of the State Securities Commission.

Article 50.- Service charges

The Securities Trading Center, the Securities Custody Center, custody members and banks designated for payment are entitled to collect assorted service charges according to law provisions.

Chapter VI

INFORMATION DISCLOSURE

Article 51.- Subjects, contents and means of information disclosure

1. The Securities Trading Center, the Stock Exchange, issuing organizations, listing organizations, securities companies, fund management companies must observe the regime of disclosing information in time and accurately in strict compliance with law provisions.

2. Issuing organizations and listing organizations shall have to clearly disclose information on the right to vote, the right to subscribe to securities, right to convert securities and other rights to all shareholders; to set and observe rules on publicization of share ownership by members of the Managing Board, the Directorate, major shareholders and the involved persons.

3. The Securities Trading Center, the Stock Exchange and issuing organizations shall, upon disclosing information, have to concurrently report to the State Securities Commission. Listing organizations, securities companies and fund management companies shall, upon disclosing information, have to concurrently report to the State Securities Commission, the Securities Trading Center and the Stock Exchange.

4. The information disclosure shall be made on the mass media and the securities market bulletin.

Article 52.- Periodical information disclosure by issuing organizations and listing organizations

1. Within 10 days after completing its annual financial statement, an issuing organization or listing organization shall have to disclose its audited production and/or business operation result of the fiscal year on three consecutive issues of a central newspaper or a newspaper of the locality where the listing organization is headquartered or on the securities market bulletin.

Issuing organizations and listing organizations shall have to take responsibility for the accuracy of their financial statements disclosed according to law provisions; auditing organizations and auditors that directly audit such financial statements shall take joint responsibility for the audited contents.

2. Within five days after completing their quarterly or biannual financial statements according to law provisions, issuing organizations and listing organizations shall have to disclose their production and/or business operation result in the quarter or six months on the securities market bulletin.

Article 53.- Extraordinary information disclosure by issuing organizations and listing organizations

1. Issuing organizations and listing organizations shall have to disclose information according to law provisions within 24 hours after the occurrence of one of the following events:

a/ Big changes in the conditions related to their production and/or business operations;

b/ Losses equal to 10% of the stock capital or more;

c/ Issuing organizations, listing organizations, members of the Managing Boards, the Directorates or the Control Boards or chief accountants are subjected to legal action taken by law enforcement agencies, or courts made the judgments related to operations of companies; or tax agencies made conclusions on violations of the tax legislation;

d/ Change in their business modes and scope;

e/ Decision on investment in production or business expansion; decision on an investment valued at 10% or more of the total value of stock capital of another organization; purchase or sale of fixed assets valued at 10% or more of the total value of their stock capital;

f/ State of bankruptcy, or decision on the merger, amalgamation, division, separation, transformation or dissolution;

g/ Signing of borrowing contracts or issuance of bonds valued at 30% or more of the total value of the stock capital;

h/ Change the Managing Board chairman, over one third of the number of Managing Board members or director (general director);

i/ Adoption of decisions of the shareholders' general assembly;

j/ Other events which may greatly affect securities prices or investors' interests.

2. Issuing organizations and listing organi-zations shall have to report to the State Securities Commission and disclose information within 24 hours on information-disclosing media or the securities market bulletin when their Managing Boards issue decisions on the following events:

a/ Split or reverse split of stocks or issuance of stocks to increase charter capital; purchase or resale of treasury stocks; date for exercise of right to purchase stocks inscribed in bonds accompanied by the right to purchase stocks or convertible bonds' date of conversion into stocks;

b/ Issuance of bonus stocks or issuance of stocks to pay dividends valued at 10% or more of stock capital;

c/ Submission of applications for delisting.

Article 54.- Information disclosure by issuing organizations and listing organizations at requests of the State Securities Commission, the Securities Trading Center and/or the Stock Exchange

1. There is information related to a listing organization and affecting securities price, and such information needs to be verified.

2. Trading price and volume of listed securities abnormally change.

3. There is information related to an issuing organization and seriously affecting interests of investors.

4. Other cases where the State Securities Commission, the Securities Trading Center and/or the Stock Exchange deem it necessary.

Article 55.- Information disclosure by the Securities Trading Center and the Stock Exchange

1. Information on transactions on the market.

2. Information on listing organizations, securities companies, fund management companies and securities investment funds.

3. Information on market management.

4. Other information on market situation.

Article 56.- Information disclosure by securities companies

1. Securities companies shall have to supply information to investors on listing organizations and securities investment funds.

2. Within 10 days after annual finance-auditing reports are available, securities companies shall have to disclose their business operation results on the information means of the Securities Trading Center and the Stock Exchange.

3. Securities companies shall have to notify investors of the information on service forms; order placing, receiving and implementing modes; transaction charge rates; list of Managing Board and Directorate members; addresses of transaction offices and changes related to such information.

4. A securities company shall have to report to the State Securities Commission, as well as the Securities Trading Center and the Stock Exchange within 24 hours so that these organizations disclose information according to the regulations when one of the following events occurs:

a/ Such company, the managing board members (for companies with managing boards), the directorate members, chief accountants are subject to legal action taken by law enforcement agencies;

b/ It intends to merge itself with another company;

c/ It suffers a loss equal to 10% or more of its asset value;

d/ It witnesses changes in its dominant shareholders (members);

e/ It appoints or dismisses its director (general director);

f/ It makes important changes in its business operations.

Article 57.- Information disclosure by fund management companies

1. A fund management company shall have to report to the State Securities Commission as well as the Securities Trading Center and the Stock Exchange within 24 hours so that these organizations disclose information according to the regulations when one of the following events occurs:

a/ Such company, the managing board members (for companies with managing boards), the directorate members, chief accountants are subject to legal action taken by law enforcement agencies;

b/ It intends to merge itself with another company;

c/ It suffers a big material loss;

d/ It witnesses changes in its dominant shareholders (members);

e/ It appoints or dismisses its director (general director);

f/ It appoints or dismisses the fund manager;

g/ It makes important changes in its business operations, which may affect the fund management;

h/ The fund value decreases by 10% as compared with the value at the time the fund is registered for official establishment;

i/ There are important changes in the fund's investment situation.

2. In case of necessity, the State Securities Commission may request the fund management companies to report or disclose information on operations of the funds or fund management companies.

Article 58.- Responsibilities in information disclosure

The subjects defined in Clause 1, Article 51 of this Decree, when disclosing information, shall have to abide by the following requirements:

a/ They must not disclose information not yet permitted to be disclosed or disclose information without having performed the reporting obligation prescribed in Clause 3, Article 51 of this Decree.

b/ They must not disclose untruthful information;

c/ They must not alter contents of the already disclosed information without explaining and reporting them according to the provisions of Clause 3, Article 51 of this Decree;

d/ They must not disclose information on the confidential information list promulgated by the Government.

Article 59.- Temporary suspension of information disclosure

a/ Information permitted by the State Securities Commission to be held off from disclosure;

b/ The information disclosure cannot be made within the prescribed time limit for force majeure reasons.

The temporary suspension of information disclosure in the above-said cases shall be effected according to law provisions.

Chapter VII

THE CENTRAL TRADING MARKET

Article 60.- The market organizing form

1. The Central Trading Market shall be organized in the form of the Securities Trading Center or the Stock Exchange.

2. The Prime Minister shall decide on the establishment of the Securities Trading Center and the Stock Exchange.

Article 61.- The organization and operation of the Securities Trading Center

1. The Securities Trading Center is a non-business unit with revenues, attached to the State Securities Commission, having the legal person status, head office, own seal and accounts; the operating fund of the Securities Trading Center shall be allocated from the State budget.

2. The Securities Trading Center has the function of managing, executing and supervising securities trading activities at the Center.

Article 62.- Tasks and powers of the Securities Trading Center

1. To organize, manage and supervise listed securities trading activities;

2. To manage the securities trading system;

3. To perform the function and tasks of the Securities Custody Center until the Securities Custody Center is established;

4. To manage and supervise securities listing activities;

5. To manage and supervise information disclosing activities of the listing organizations and the fund management companies;

6. To manage and supervise activities of members of the Securities Trading Center;

7. To organize, manage and perform the market information disclosure;

8. To act as a conciliatory intermediary when so requested upon the arising of disputes related to securities trading activities;

9. To collect assorted securities charges prescribed by law;

10. To observe the reporting, statistical, accounting and auditing regimes according to law provisions;

11. To perform other tasks as authorized by the chairman of the State Securities Commission.

Article 63.- Members of the Securities Trading Center

Securities companies which are granted licenses for brokerage operation or dealing licenses by the State Securities Commission may register to become members of the Securities Trading Center. Operations of members of the Securities Trading Center shall comply with law provisions.

Article 64.- The Stock Exchange

1. The Stock Exchange is a legal person enjoying financial autonomy and subject to the supervision and management by the State Securities Commission.

2. The organization, apparatus and operation of the Stock Exchange shall be decided by the Prime Minister.

Chapter VIII

SECURITIES COMPANIES

Article 65.- Subjects, securities business types and services eligible for license granting

1. Securities business licenses shall be granted by the State Securities Commission to joint stock companies or limited liability companies, which are established to conduct securities business and provide securities services and meet the conditions prescribed in Article 66 of this Decree.

2. Major securities business types include:

a/ Securities brokerage;

b/ Securities dealing;

c/ Securities management portfolio management;

d/ Securities issuance underwriting;

e/ Financial and securities investment consultancy.

3. Securities companies may provide securities custody services and other financial services in compliance with law provisions.

Article 66.- Conditions for being granted securities business licenses

1. Having a business plan compatible with the socio-economic development objectives and securities sector development objectives;

2. Having adequate material and technical facilities for securities business;

3. Having a legal capital level prescribed for each type of business as follows:

- Securities brokerage: VND 3 billion;

- Securities dealing: VND 12 billion;

- Securities management portfolio management: VND 3 billion;

- Securities issuance underwriting: VND 22 billion;

- Financial and securities investment consultancy: VND 3 billion.

In cases where a securities company applies for a license for several types of business operation, its legal capital shall be the total amount of legal capital levels prescribed for the types of business operation for which the company is to be granted a license.

4. The director, deputy director (general director, deputy general director), business staff of a securities company must fully satisfy the conditions for being granted securities business practice certificates by the State Securities Commission.

5. Issuance underwriting licenses shall only be granted to the companies which have dealing licenses.

Article 67.- Procedures for granting securities business licenses

1. A dossier of application for securities business license comprises:

a/ An application for securities business license;

b/ The tentative business plan for the first three years of operation; the capital contribution plan; information related to the founding organization;

c/ The charter of the company;

d/ Valid papers proving that the company has satisfied the conditions prescribed in Article 66 of this Decree.

2. The time limit for granting securities business licenses shall be 60 days after the State Securities Commission receives the valid dossiers. In cases where it refuses to grant securities business licenses, the State Securities Commission shall have to state in writing the reasons therefor.

3. Securities companies which have already been granted securities business licenses and wish to undertake the division, separation, merger, amalgamation or transformation shall have to carry out the procedures to re-apply for securities business licenses.

4. Securities companies which have already been granted securities business licenses and wish to add or change their securities business types shall have to carry out the procedures for amending or supplementing their securities business licenses.

Article 68.- Announcement of securities business licenses

1. Before officially commencing its operation, a securities company shall have to announce on three consecutive issues of a central newspaper or a newspaper of the locality where the company is headquartered the following principal contents:

a/ Its name;

b/ The address of its head office;

c/ The serial number of its business license;

d/ Its business type;

e/ Its charter capital;

f/ The name of its representative at law.

2. Securities companies must post up their securities business licenses, names of their representatives at law, lists of their branches, transaction bureaus and order-receiving agents at their head offices and branches.

3. Securities companies must post up the State Securities Commission’s approval decisions at their head offices, branches, transaction bureaus and order-receiving agents when there are changes prescribed in Article 69 of this Decree.

Article 69.- Changes subject to approval

The following changes in securities companies must be approved in writing by the State Securities Commission:

1. Relocation of head offices or branches;

2. Cessation of business and service activities;

3. Setting up or shut-down of branches and transaction bureaus;

4. Increase or reduction of business operations.

Article 70.- Rights and obligations of securities companies

1. To sign written contracts with clients on securities trading, securities registration and custody, securities investment portfolio management, securities issuance underwriting, financial and securities investment consultancy.

2. To receive transaction orders from clients only at their head offices, branches, transaction bureaus and order-receiving agents.

3. To execute orders of clients ahead of those of securities companies. To manage their assets, cash and securities in separation from those of clients, and use deposits on accounts of clients in strict accordance with contracts with clients; to separate each client’s assets, cash and securities.

4. To gather adequate information on financial status and investment purposes of clients; to supply market information in a full, prompt and accurate manner to clients; to keep confidential information on clients, except for cases prescribed by law;

5. To separate their dealing from brokerage, investment portfolio management and issuance underwriting; to separate business operations of securities companies from those of their owners.

6. To regularly maintain the minimum liquidity capital level as prescribed by law.

7. To invest in securities or contribute capital only within the permitted limit prescribed by law.

8. Not to conduct credit operations or provide securities loans.

9. Securities companies, members of managing boards, directorates or of control boards of the companies are not allowed to invest in other securities companies.

10. To pay the fee for granting securities business licenses and the fee for granting securities business practice certificates according to the provisions of law.

11. To be entitled to collect charges according to the provisions of law when providing services to clients.

12. To implement the financial and accounting regime according to the provisions of law.

13. To comply with the relevant law provisions.

Article 71.- Suspension of operation and withdrawal of securities business licenses

1. A securities company may be suspended from securities business activities for a maximum period of 60 days in the following cases:

a/ It has ceased securities business activities without prior written consent of the State Securities Commission;

b/ It is no longer able to fully meet the conditions for granting securities business licenses prescribed in Clauses 2 and 3, Article 66 of this Decree and is unable to restore such conditions within 60 days after it receives a written notice from the State Securities Commission;

c/ It violates the provisions of Articles 103, 104, 105, 106, 107 and 108 of this Decree.

2. A securities company shall have its securities business license withdrawn in the following cases:

a/ It still fails to redress its violations after the securities business suspension duration prescribed in Clause 1 of this Article expires;

b/ It fails to commence its operation within 12 months as from the date of being granted the license;

c/ It is dissolved or goes bankrupt;

d/ It has its business registration certificate withdrawn.

3. A securities company that is suspended from operation or has its securities business license withdrawn shall have to complete all transactions and contracts which it previously committed itself to. The State Securities Commission may designate another securities company to complete transactions and/or contracts of the securities company having its operation suspended or its license withdrawn. In this case, the authorization relationship between the two companies is automatically established.

Article 72.- Reporting regime

1. Securities companies shall have to implement the regime of periodical reports and irregular reports according to the provisions of law. Annual financial statements must be audited by recognized auditing organizations. In case of necessity, securities companies shall have to make reports at requests of the State Securities Commission.

2. A securities company shall have to report to the State Securities Commission on the following changes:

a/ Increase or decrease of its charter capital;

b/ Change of its name;

c/ Change of managing board or directorate members;

d/ Amendments and/or supplements to its charter;

e/ Setting up or shut-down of order-receiving agent(s).

Article 73.- Securities business practice certificates

1. Directors, deputy directors (general directors, deputy general directors), business staff members of securities companies must have securities business practice certificates.

2. Securities business practice certificates shall be granted to individuals at requests of securities companies where such individuals work when they fully meet the following conditions:

a/ Having full legal capacity and full capacity for civil act;

b/ Satisfying the criteria of professional qualifications;

c/ Possessing all securities professional expertise certificates granted by the State Securities Commission;

d/ Being not subject to penal liability examination or imprisonment sentences or deprivation of the right to practice certain jobs according to the provisions of law.

Article 74.- Restrictions on securities business practitioners

1. Securities business practitioners shall only be allowed to open securities transaction accounts for themselves at securities companies where they work.

2. A securities business practitioner must not:

a/ Concurrently work as director or a shareholder owning more than 5% of the voting shares of a securities issuing organization, except for cases where he/she acts as representative for a securities company at issuing organizations where such securities company invests or contributes capital;

b/ Concurrently work for two or more securities companies.

Article 75.- Extension or withdrawal of securities business practice certificates

1. A securities business practice certificate shall be valid for three years after the date of granting. Practice certificates shall be extended when practitioners pass qualification tests organized by the State Securities Commission.

2. A securities business practitioner shall have his/her securities business practice certificate withdrawn in the following cases:

a/ He/she is no longer able to meet the conditions for being granted securities business practice certificate prescribed in Article 73 of this Decree;

b/ He/she no longer works for any securities company;

c/ He/she violates the provisions of Articles 103, 104, 105, 106 and 107 of this Decree.

Chapter IX

SECURITIES INVESTMENT FUNDS AND FUND MANAGEMENT COMPANIES

Article 76.- Participating parties

1. The fund management company shall manage the securities investment fund.

2. The supervisory bank shall conduct the maintenance and custody of assets of the securities investment fund and supervise the fund management company in protecting the interests of investors.

3. Investors shall contribute capital to the securities investment fund and bear liability only within their respective contributed capital amounts.

Article 77.- Setting up of securities investment funds

1. A securities investment fund shall be set up by a fund management company together with Vietnamese as well as foreign organizations and individuals.

2. A securities investment fund shall have a minimum charter capital of VND 5 billion.

3. The setting up of securities investment funds which issue securities investment certificates to the public must be licensed by the State Securities Commission.

4. The setting up of securities investment funds with capital contributed by their members must be registered with the State Securities Commission.

Article 78.- Procedures and dossiers of application for licenses to set up securities investment funds which issue securities investment fund certificates to the public

1. Procedures to apply for licenses to set up securities investment funds which issue securities investment fund certificates to the public shall comply with the provisions in Clause 1, Article 9 and Articles 12, 13, 14, 15 and 16 of this Decree.

2. A dossier of application for license to set up a securities investment fund and issuance of securities investment fund certificates to the public comprises:

a/ An application for license to set up a securities investment fund and issuance of securities investment fund certificates to the public;

b/ The charter of the securities investment fund;

c/ The prospectus;

d/ The plan for issuance of securities investment fund certificates;

e/ The contract on supervision of assets of the securities investment fund between the fund management company and the supervisory bank;

f/ The fund founders' commitments not to transfer securities investment fund certificates they own within two years after the date of issuance.

3. The fund management companies shall have to take responsibility for validity of dossiers according to the provisions of Clause 4, Article 10 of this Decree.

4. Within 10 working days after the end of the issuance of securities investment fund certificates to the public, the fund management companies shall have to send reports on the issuance results to the State Securities Commission and register for the setting up of securities investment fund. Within 15 working days after receiving the complete and valid dossiers, the State Securities Commission shall have to handle the registration for setting up of securities investment funds.

Article 79.- Suspension of issuance of securities investment fund certificates

1. The issuance of securities investment fund certificates shall be suspended if the State Securities Commission detects errors in the prospectus which may cause losses to investors.

2. The fund management companies shall have to promptly notify the issuance suspension to investors. In the suspension duration, investors may cancel the subscription to investment fund certificates and request the fund management companies to reimburse the subscription deposit within 30 days as from the date they send their written requests.

3. If fund management companies continue to issue securities investment fund certificates, they shall have to make amendments and/or supplements at requests of the State Securities Commission and publicly announce such amendments and/or supplements.

Article 80.- Withdrawal of licenses for issuance of securities investment fund certificates

1. Issuance licenses shall be withdrawn in the following cases:

a/ Errors mentioned in Clause 1, Article 79 are not corrected strictly according to the procedures and within the prescribed time limit;

b/ The issuance drive fails to achieve at least 50 investors or the volume of actually issued investment fund certificates fails to reach 80% of the volume of investment fund certificates permitted to be issued.

2. Fund management companies shall have to promptly notify the withdrawal of issuance licenses to investors and withdraw investment fund certificates already issued, and at the same time reimburse money to investors within 30 days after the licenses are withdrawn. Past that time limit, the fund management companies shall have to pay compensations to investors according to the terms already committed with investors in compliance with law provisions.

Article 81.- Procedures to register for the setting up of securities investment funds with capital contributed by members

1. A dossier of registration for the setting up of a securities investment fund comprises:

a/ An application for registration for setting up of a securities investment fund;

b/ The charter of the securities investment fund;

c/ The contract for supervision of the fund's assets;

d/ The list of members contributing capital to set up the securities investment fund.

2. Within 30 days after receiving complete and valid dossiers, the State Securities Commission shall grant certificates of registration for setting up securities investment funds; in case of refusal, the State Securities Commission shall have to state reasons therefor in writing.

3. The information disclosure after the registration for setting up securities investment funds shall comply with the provisions in Article 14 of this Decree.

Article 82.- Representative boards of funds

1. A securities investment fund may have its representative board. Members of the representative board shall be elected by the congress of investors.

2. Rights, obligations and operation principles of the fund representative board are prescribed in the fund charter adopted by the congress of investors.

Article 83.- Conditions for granting securities investment fund management licenses

The State Securities Commission shall grant securities investment fund management licenses to organizations which meet the following conditions:

1. Being a joint-stock company or limited liability company established under law provisions and having a minimum legal capital of VND 5 billion;

2. Having a professional staff trained in securities;

3. Having adequate material and technical facilities for fund management activities;

4. The director, deputy director (general director, deputy general director) of the fund management company and fund manager must fully meet the conditions for being granted fund management practice certificates according to the provisions of Article 97 of this Decree.

Article 84.- Granting of securities investment fund management licenses

1. A dossier of application for a securities investment fund management license comprises:

a/ An application for a securities investment fund management license;

b/ The charter of the company;

c/ The tentative business plan for the first three years of operation; the capital contribution plan and information related to the founding organization;

d/ Valid papers proving that the company has satisfied the conditions prescribed in Article 83 of this Decree.

2. The time limit for granting securities investment fund management licenses is 60 days after the State Securities Commission receives valid dossiers. In case of refusal to grant fund management licenses, the State Securities Commission shall have to state reasons therefor in writing.

3. Fund management companies already granted securities fund management licenses which wish to undertake the division, separation, amalgamation, merger or transformation shall have to carry out the procedures for the re-grant of fund management licenses.

Article 85.- Changes subject to approval

The following changes of securities investment fund management companies must be approved in writing by the State Securities Commission:

1. Relocation of head offices, branch offices;

2. Cessation of business or service activities;

3. Setting up or shut-down of branches or representative offices.

Article 86.- Announcement of securities investment fund management licenses

Within 30 days after it is granted the securities investment fund management license, a securities investment fund management company shall have to announce on three consecutive issues of a central newspaper or a newspaper of the locality where its head office is located the following contents:

1. The name of the company;

2. The address of its head office;

3. The serial number and date of issuance of the fund management license;

4. The business type;

5. The charter capital;

6. The name of the company's representative at law.

Article 87.- Rights and obligations of securities investment fund management companies

1. To comply with the charters of funds and protect interests of investors.

2. To be fair, honest and operate in the interest of securities investment funds.

3. To separate the management of each securities investment fund.

4. For transactions of the funds where exist interest conflicts, to ensure equitability and no harm caused to interests of the funds, to adequately supply information related to such transactions to the fund representative boards.

5. All securities transactions of managers and staff members of the fund management companies must be reported to and concentratedly managed at the fund management companies under the supervision by the internal control sections.

6. To ensure the relationship of responsibility authorization to the third party and the changes in the organization and management of the fund management companies must not affect interests and operation of the funds.

7. When the fund management companies conduct transactions to purchase or sell assets for the funds, the members of the managing boards, the directors, the deputy directors (general directors, deputy general directors) of the companies, the fund managers must not receive any benefits for companies or for themselves or for the third party other than charges and bonuses prescribed in the fund charters.

8. To represent the funds in exercising the rights over and performing the obligations toward the assets in the investment portfolio of the funds.

9. To enjoy charges and bonuses prescribed in the fund charters; not to collect and spend them in contravention of the fund charters.

10. To provide financial consultancy and securities investment consultancy.

Article 88.- Restrictions on operation of securities investment fund management companies

1. Securities investment fund management companies are not allowed to use the funds' capital and assets to lend or provide guarantee for any loan; they must not borrow to finance activities of the funds, except for short-term borrowing to cover necessary expenditures.

2. Directors, deputy directors (general directors, deputy general directors), members of managing boards of securities investment fund management companies, fund managers or involved persons are not allowed to purchase assets of the funds for their companies or for themselves or sell their own assets to the funds.

3. Securities investment fund management companies must not be the involved persons of the banks supervising assets of the funds.

4. Securities investment fund management companies must abide by other law provisions on management of capital and assets of funds.

Article 89.- Suspension of operation and withdrawal of securities investment fund management licenses

1. A securities investment fund management company may be suspended from operation for a maximum duration of 60 days when one of the following events occurs:

a/ Cessation of its business operation without prior written consents of the State Securities Commission;

b/ Its violation of the provisions of Articles 87 and 88 of this Decree;

c/ Its failure to meet the conditions prescribed in Article 83 of this Decree;

d/ Its violation of the provisions of Articles 103, 104, 105, 106, 107 and 108 of this Decree.

2. Securities investment fund management companies shall have their fund management licenses withdrawn in the following cases:

a/ After the operation suspension duration expires, they still fail to remedy their violations;

b/ Failure to commence their business operations within 12 months after the fund management licenses are granted;

c/ Dissolution or bankruptcy;

d/ Withdrawal of their business registration certificates.

3. Securities investment fund management companies which are suspended from operation or have their securities investment fund management licenses withdrawn shall have to complete transactions and perform previously signed contracts. The State Securities Commission may designate other fund management companies to complete transactions or contracts of the companies suspended from operation or having their fund management licenses withdrawn.

Article 90.- Rights and obligations of investors

1. To comply with fund charter; to abide by decisions of the investors' congress.

2. To pay fully money for purchase of securities investment fund certificates and to take liability for debts and other asset obligations of the fund within their respective contributed capital portions.

3. To enjoy benefits from investment activities of the fund.

4. To transfer contributed capital or investment certificates.

Article 91.- Investors' congress

1. Investors' congress shall be convened at least once a year by the fund representative board or the fund management company (for securities investment funds without representative boards).

2. Investors' congress shall be extraordinarily convened in the following cases:

a/ There are important changes in the investment environment and investment situation of the fund;

b/ The securities investment fund management company goes bankrupt or is suspended from operation;

c/ The securities investment fund management company seriously violates the fund charter;

d/ When requests of investors or groups of investors which own 10% or more of the total volume of securities investment fund certificates currently in circulation are received.

Article 92.- Dissolution of securities investment funds

1. A securities investment fund shall be dissolved when its operation duration inscribed in its charter expires or under a decision of the investors' congress.

2. Before proceeding with the dissolution, the fund representative board or the fund management company (for securities investment funds without representative boards) shall have to convene and submit the dissolution plan to the investors' congress for decision.

Article 93.- Supervisory banks

1. Supervisory banks shall be selected by fund management companies and must be consented by fund representative boards or adopted by the investors' congress. The selection and change of supervisory banks must be reported to the State Securities Commission.

2. Supervisory banks must meet the following conditions:

a/ Having securities custody licenses granted by the State Securities Commission;

b/ Not owning any assets of securities investment funds;

c/ Not being entities related to securities investment fund management companies.

Article 94.- Responsibilities of supervisory banks

1. To manage assets of the funds in separation from other assets.

2. To inspect and supervise the fund management and ensure its compliance with law and the charters of the funds.

3. To conduct the revenue and expenditure activities of the funds in strict compliance with guidance of the fund management companies.

4. To certify reports made by the fund management companies on assets and operations of the funds.

5. To implement the regime of periodical reports and irregular reports according to regulations, and make reports at requests of the State Securities Commission.

6. To report to the State Securities Commission when detecting that the fund representative boards or the fund management companies commit acts of law violation or acts in contravention of the fund charters.

Article 95.- Revenues from activities of fund asset supervision

Supervisory banks shall be entitled to enjoy benefits provided for in the fund charters; they must not receive any other benefits for themselves or for the third party.

Article 96.- Reporting regime of securities investment fund management companies

1. Securities investment fund management companies shall have to implement the regime of monthly, quarterly and annual reports on their operations and the assets of the securities investment funds they manage according to law provisions. Annual financial statements of securities investment fund management companies and annual asset reports of securities investment funds managed by fund management companies must be audited by accredited auditing organizations.

2. A fund management company shall have to report to the State Securities Commission the following events:

a/ Increase or decrease of its charter capital;

b/ Change of its name;

c/ Change of managing board or directorate members;

d/ Amendments and/or supplements to its charter and the charter of the fund under its management;

e/ Abnormal events which may severely affect the financial capability and investment activities of the company and funds under its management.

3. In case of necessity, the fund management companies shall have to report at requests of the State Securities Commission.

Article 97.- Fund management practice certificates

Directors, deputy directors (general directors, deputy general directors) of the fund management companies and fund managers must have fund management practice certificates. The procedures for granting fund management practice certificates shall comply with the provisions of Article 73 of this Decree.

The extension and withdrawal of fund management practice certificates shall comply with the provisions of Article 75 of this Decree.

Article 98.- Restrictions on fund management practitioners

Fund management practitioners must not:

1. Be director or shareholders owning over 5% of voting shares of a securities issuing organization.

2. Work concurrently for two or more fund management companies.

Chapter X

THE PARTICIPATION BY FOREIGN PARTIES

Article 99.- General principles

Foreign parties participating in securities investment or conducting securities business in Vietnam must comply with the provisions of this Decree and the Vietnamese laws.

Article 100.- Securities investment

Foreign organizations and individuals may buy and sell securities on Vietnam's securities market according to the ratios prescribed by the Prime Minister.

Article 101.- Establishment of securities business organizations

1. Foreign securities business organizations may contribute capital, buy shares or contribute capital to establish joint-venture securities companies or fund management companies with Vietnamese partners. The establishment of joint-venture companies must be licensed by the State Securities Commission. The ratio of capital contribution of foreign securities business organizations to joint ventures shall be prescribed by the Prime Minister.

2. Foreign securities investment fund management companies which wish to open their branches operating in Vietnam must be licensed by the State Securities Commission.

Article 102.- Representative offices

Foreign securities business organizations which wish to set up their representative offices in Vietnam must be licensed by the State Securities Commission. The setting up and operation of representative offices of foreign securities business organizations shall comply with law provisions.

Chapter XI

PROHIBITED ACTS

Article 103.- Inside trading

1. Subjects that know internal information are prohibited from taking the following acts:

a/ Using internal information to buy or sell securities for themselves or for the third party;

b/ Disclosing and supplying internal information or providing consultations for the third party to buy or sell securities on the basis of internal information.

2. The following organizations and individuals are considered as knowing internal information:

a/ Members of managing boards, directorates or control boards of issuing organizations or listing organizations;

b/ Persons who have access to internal information thanks to their working positions in issuing organizations or listing organizations;

c/ Major shareholders of issuing organizations or listing organizations;

d/ Individuals working in the State Securities Commission, the Securities Trading Center, the Stock Exchange and other agencies which have access to internal information;

e/ Auditors of financial activities of issuing organizations or listing organizations;

f/ Individuals working in organizations which have business cooperation relationships with issuing organizations or listing organizations;

g/ Individuals working in intermediary organizations on the securities market;

h/ Other relevant organizations and individuals.

3. Internal information are those which may greatly affect securities market prices, have not yet been disclosed or must not be disclosed to the public.

Article 104.- Market manipulation

Organizations and individuals must not directly or indirectly participate in the following activities:

1. Conducting securities transactions without changing the ownership over securities;

2. Acting in collusion with others to buy or sell securities for the purpose of creating false supply and demand;

3. Taking part in or enticing others into continuously buying or selling securities for the purpose of manipulating securities prices.

Article 105.- False information

Organizations and individuals are prohibited from fabricating and spreading false information, thus severely affecting securities trading activities.

Article 106.- Short sale

Organizations and individuals are prohibited from selling securities if they do not own such securities at the time of trading.

Article 107.- Damaging interests of investors

Securities companies and their staffs are prohibited from performing the following acts:

1. Acting against the buying or selling orders placed by investors;

2. Failing to supply transaction certifications as prescribed;

3. Buying or selling securities on clients' accounts at their own will or buying or selling securities in the names of their clients;

4. Other acts which damage interests of investors.

Article 108.- Legal persons which open accounts in the names of individuals

Legal persons are prohibited from opening accounts in the names of individuals for buying or selling securities.

Chapter IX

THE STATE MANAGEMENT OVER SECURITIES AND SECURITIES MARKET

Article 109.- The State management over securities and securities market

1. The Government shall perform the uniform State management over securities and securities market.

2. The ministries, the State Securities Commission and the People's Committees of the provinces and centrally-run cities shall perform the State management over securities and securities market according to the Government's regulations.

Article 110.- The contents of the State management over securities and securities market

1. Issuing legal documents on securities and securities market; formulating strategies, policies, plans for development of the securities market;

2. Granting, extending, suspending and withdrawing various licenses related to the securities issuance, listing, business and services, and collecting licensing fees according to law provisions;

3. Organizing and managing the organized securities trading market and the intermediary and assisting organizations operating on the securities market;

4. Inspecting, supervising and handling violations of the legislation on securities and securities market;

5. Providing professional training, disseminating and popularizing knowledge on securities and securities market;

6. Undertaking international cooperation on securities and securities market.

Chapter XIII

INSPECTION, SUPERVISION, SETTLEMENT OF DISPUTES, COMPLAINTS AND DENUNCIATIONS, AND HANDLING OF VIOLATIONS

Article 111.- Inspection, supervision and handling of violations

Organizations issuing, listing, trading, conducting transactions in securities or providing securities services, individuals engaged in securities activities shall be subject to the inspection, supervision and violation handling by the State Securities Commission according to law provisions.

Article 112.- Objects and scope of inspection, supervision and handling of violations

1. Objects of inspection and supervision include:

a/ Organizations issuing securities to the public;

b/ Securities listing organizations;

c/ The Securities Trading Center and the Stock Exchange;

d/ The Securities Custody Center;

e/ Securities companies; securities investment fund management companies; securities investment funds, securities registration, custody or clearing payment organizations, supervisory banks, banks designated for payment;

f/ Securities business practitioners;

g/ Organizations and individuals involved in securities activities and securities market.

2. The scope of inspection and supervision covers:

a/ Securities issuing activities;

b/ Securities listing activities;

c/ Securities trading activities;

d/ Securities business and service providing activities;

e/ Information disclosing activities.

Article 113.- The settlement of disputes

1. Disputes arising from the securities issuance, business and transaction shall be settled through negotiations and conciliation. The Securities Trading Center, the Stock Exchange or the State Securities Commission may act as an intermediary for conciliation of arising disputes. In cases of conciliation failure, the concerned parties may refer their disputes to arbitration or court for settlement according to law provisions.

2. Disputes involving foreign parties, where the disputing parties fail to reach an agreement on conciliation, shall be settled according to Vietnamese laws or the provisions of international treaties which the Socialist Republic of Vietnam has signed or acceded to.

Article 114.- Settlement of complaints and denunciations

The State Securities Commission shall have to settle complaints and denunciations in the field of securities and securities market according to law provisions on settlement of complaints and denunciations.

Article 115.- Handling of violations

Organizations and/or individuals intentionally or unintentionally committing acts of violating the provisions of this Decree and other legal documents on securities and securities market shall, depending on the nature and seriousness of their violations, be disciplined, administratively handled or examined for penal liability according to law provisions. If material damage is caused, compensations therefor must be made according to law provisions.

Chapter XIV

IMPLEMENTATION PROVISIONS

Article 116.- This Decree takes effect 15 days after its publication in the Official Gazette and replaces the Government's Decree No. 48/1998/ND-CP of July 11, 1998. The previous stipulations which are contrary to this Decree are all hereby annulled.

Article 117.- The chairman of the State Securities Commission shall have to propose the competent State body to guide the implementation of this Decree.

Article 118.- The ministers, the heads of ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People's Committees of the provinces and centrally-run cities shall have to implement this Decree.

On behalf of the Government

Prime Minister
PHAN VAN KHAI